ACE CASH: To Refund Customers for Alleged Usury Law Violation-------------------------------------------------------------A judge signed off Tuesday on a settlement of a lawsuit against a companythat was accused of violating the state usury law.

Ace Cash Express Inc., which has offices in North Little Rock, West Memphisand Pine Bluff, is to refund fees to more than 5,000 customers in Arkansas,according to the judgment signed by Pulaski County Circuit Judge DavidBogard.

Angie Gwatney of Faulkner County filed a class action suit against theIrving, Texas-based check-cashing company. She argued that Ace's loanpractices violated a state constitutional provision that limits interestrates. The lawsuit claimed that the interest on payday advances given byAce could reach to more than 700 percent. Those who paid fees to Ace'sArkansas locations from Feb. 9, 1996, through June 15, 1999, are to berefunded 75 percent of those fees in long-distance phone cards, accordingto the settlement agreement. The value of the settlement could reach $1.6million. A claims administrator is to contact people in the class so theycan get their portions of the settlement.

The company admitted no wrongdoing and said it settled to avoid costs offurther litigation. Ace contends its transactions are not loans and itsfees do not meet limits set by the state constitution.

Bogard also ordered Ace to pay $325,000 in legal fees to the plaintiffs.The Associated Press, September 6, 2000)

AUTO INSURANCE: TX to Seek Refunds for Thousands Overcharged------------------------------------------------------------State regulators are investigating on the top auto insurers in Texas forovercharging thousands of drivers who watched their premiums go up afterthey were involved in accidents. The estimated overcharges by the FarmersInsurance Group could amount to several million dollars, according to theTexas Department of Insurance.

The agency said Tuesday it will seek refunds for all affected FarmersInsurance policyholders and consider fines against the company. "This willsurely involve restitution and could involve some sort of punitive action,including fines," Jim Davis, of the Department of Insurance, toldWednesday's edition of The Dallas Morning News.

A spokesman for Farmers declined to estimate the total amount ofovercharges. When asked how many Farmers policyholders were affected, BobHuxel told the newspaper, "We hope to have those numbers firmed up by nextweek."

The Texas Department of Insurance began looking at the allegations afterthey were reported by Farmers. The company - the second largest autoinsurer in Texas with more than $1 billion in premiums - acknowledged thata class-action lawsuit by a group of policyholders was being prepared whenthey approached state regulators. That lawsuit has been abandoned now thatinsurance regulators are looking into the overcharges, The News reported.The excessive charges involved drivers who were in accidents in which theywere at fault. Farmers reportedly levied surcharges against these at-faultpolicyholders for longer than state regulations allow.

Also on Tuesday, Insurance Commissioner Jose Montemayor announced a newtoll-free hotline for reporting possible insurance fraud. Montemayor saidthe state loses at least $2 billion a year to insurance scams. He outlinedthe state's top 10 insurance fraud cases, which range from a Bowie Countyman who beat his knee with a ball peen hammer as he tried to fake injuriesafter falling in a fast-food restaurant to the "kingpin" of amultimillion-dollar life insurance and viatical settlement swindle in theDallas area. "These cases illustrate the many ways people try to cheatinsurance companies and individual insurance consumers," Montemayor said.

Studies show that insurance claim fraud can add from $200 to $1,000 a yearto the average cost of insurance for policyholders nationwide. Montemayorsaid the department estimates that about $2 billion goes by the wayside inTexas because of fraud.

The department says about 10 percent of claims are fraudulent in the state."Insurance fraud is an increasingly expensive 'hidden tax' to Texasconsumers and one of the most costly problems for insurance companies whoare trying to serve millions of honest policyholders," said theSouthwestern Insurance Information Service's Sandra Ray, who praisedMontemayor's efforts.

Last year, the insurance department handled more than 2,000 complaints thatled to 74 convictions. About 200 cases are under investigation now. (TheAssociated Press State & Local Wire, September 6, 2000)

BANK OF BERMUDA: Miami Lawsuit Accuses of Role in Pyramid Scheme----------------------------------------------------------------More than 1,000 victims of an alleged $300 million pyramid scheme havenamed the Bank of Bermuda (Cayman) Ltd. as a defendant in a class-actionlawsuit filed in Miami.

The recently filed lawsuit alleges that the bank played a primary role inthe scheme carried out by a business called Cash 4 Titles. The lawsuit saidthe defendants violated the Racketeering Influence and CorruptOrganizations Act, which allows a court to award triple damages.

The bank solicited money for Cash 4 Titles from U.S. citizens, especiallyFlorida residents, with knowledge of an illegal scheme, the lawsuit said.It also wired money and sent checks to financial institutions in the UnitedStates to perpetuate the business and traveled to the United States tofurther the enterprise, the lawsuit alleged.

"Senior officers of the bank played an active role in the scheme andfacilitated its continued existence even as the United States federalauthorities began investigating Richard Homa and Michael Gause, thefounders of the Cash 4 Titles business, all the while knowing about andbenefiting from the illegitimate scheme," the lawsuit stated.

The lawsuit alleged that the Bank of Bermuda added an air of legitimacy tothe Cash 4 Titles operation by making payments to early lenders under thepretext that the payments were from Cash 4 profits. The bank continued tohelp the enterprise even after senior officials knew the fraudulent natureof the scheme, the lawsuit claimed.

"It would be inappropriate for the bank to comment on litigation pendingbefore the court," Bank of Bermuda managing director Allen Bernardo saidrecently. "But, the Bank of Bermuda denies any wrongdoing on its part inrespect of the Cash 4 Titles scheme or the fraud associated with it andintends to defend its position vigorously."

No Bank of Bermuda officers are named in the lawsuit, although threeofficers were fired in December following an internal investigation intothe bank's involvement with Cash 4 Titles.

The Bank of Bermuda was founded in 1889 and has offices in 14 countries. Itis generally considered to be the largest offshore bank in the BritishCaribbean territory and one of the most conservative. It has assets of $8.4billion as of June 30.

The lawsuit was filed under the name of plaintiff Edward Waller of Orlando,Florida. In the documents, Waller said he traveled to the Cayman Islandsand met with a bank director, who was not named, and was assured that Cash4 Titles "checked out fine." (The Associated Press State & Local Wire,September 6, 2000)

BRIDGESTONE/FIRESTONE: Congress Is Planning Hearings Wednesday--------------------------------------------------------------Congress is planning hearings Wednesday on the Firestone tire controversy,with company officials and federal safety regulators as witnesses, andcommittees in the House and Senate appear ready to roast everyone connectedto the scandal over a bed of slow-burning coals.

While that may make for some interesting sound bites - committee membersare already making dark references to "Tiregate" -- and may or may notresult in useful future legislation, the real action should occur when awave of lawsuits hits the courts later this year.

Tires manufactured by Tennessee-based Bridgestone/Firestone are allegedlysuspect in accidents resulting in at least 88 deaths nationally and scoresmore overseas. Most of the U.S. tires were on Ford vehicles, primarily asport utility vehicle called the Explorer. Some of the more violentaccidents reportedly involved tread separation at high speeds.

Members of congressional committees say they want to know why it tookFirestone executives so long to issue a recall of the affected models, anestimated 6.5 million tires last month, when similar recalls were carriedout earlier in 16 foreign countries. They also want to know whetherexecutives at Firestone or Ford engaged in a cover-up while drivers andpassengers continued at risk over most of the past decade, when the tireswere in use.

In the current controversy, consumer safety advocates also point the fingerat the National Highway Traffic Safety Administration, which over thecourse of a decade has received more than a thousand complaints aboutdefects on Firestone tires but apparently saw no pattern and issued noconsumer alert.

While watching company executives and federal safety officials sweat undercongressional questioning on C-SPAN Wednesday may provide a certainpsychological satisfaction, only the courts can offer real redress.

But getting redress in the courts, especially for alleged defects in afederally regulated industry such as tire manufacturing, can beproblematic.

The state courts are generally friendly to plaintiffs in liability suits;federal courts are less so.

A class-action suit was filed last month in state court in Miami on behalfof those who, while not injured in an accident, were forced to drive on therecalled tires while waiting for replacements. More such state suits, withslight variations, are sure to follow. Meanwhile, and more seriously, suitsallegedly involving the affected tires and fatal accidents have beenongoing for several years in courts in at least four states.

However, the Supreme Court has a long history of "pre-empting" stateliability law with federal regulation -- trumping plaintiff-friendly state"tort" law with the supremacy of federal regulations -- and a 5-4 majorityas late as last May used the Federal Motor Vehicle Safety Standards, orFMVSS, to rule for an auto manufacturer in a liability suit.

In Geier et al vs. American Honda et al, the 5-4 Supreme Court majoritysaid that the FMVSS pre-empted District of Columbia tort law -- D.C. law isanalogous to state law -- in a case involving the lack of airbags in a 1987car. Since the FMVSS as they existed at the time did not require the car tohave airbags and the company had met the requirements as spelled out in thefederal regulations, American Honda could not be held liable for a youngwoman's head injury in the car in 1992, the Supreme Court said.

The FMVSS apply to almost all vehicle parts, including tires, and anycompany on the defense end of a liability suit will attempt to show thatits product met minimum federal standards, despite the rigors of state law.Federal regulations also provide a window for a company to move that anyliability suit be moved to federal court from state court.

Such a strategy may leave plaintiffs with the sole option of trying toprove that the tires were deliberately manufactured with a significantdefect -- something Firestone has vehemently denied. How the company willexplain the lack of a domestic recall in the face of earlier foreignrecalls might prove stickier.

Automaker Ford could also find itself a target of lawsuits. The companyrecommended that consumers inflate the tires on the low end of arecommended scale to give SUVs, which have rollover problems, morestability. However, reports say that drivers in some of the accidents mayhave inflated their tires at considerably less pressure than thatrecommended by Ford.

In related action, the non-profit Center for Auto Safety has filed suit inWashington to force Ford and Bridgestone/Firestone to replace all ATX, ATXII and Wilderness tires regardless of size and the plant where made. Thenumber of tires targeted by the complaint is at least twice as large as the6.5 million tires that Firestone has already agreed to recall. (UnitedPress International, September 6, 2000)

CREDIT STORE: Contests Debt Collection Suit Filed in IL in February-------------------------------------------------------------------In February 2000, the Company and certain officers and directors were suedin United States District Court for the Northern District of Illinois in anaction entitled Greene v. Burke, et al., No. 000 1039 (N.D. IL.). The suitwas brought on behalf of a class of certain Illinois debtors allegingviolations of the Fair Debt Collection Practices Act, the Federal CreditRepair Organization Act, and the Illinois Credit Services Organization Actarising out of the Company's attempts to collect out-of-statute debts. Thecomplaint seeks actual, statutory and punitive damages on behalf of theclass. The Company is defending itself vigorously.

CREDIT STORE: Defends 1999 Debt Collection Cases in Florida and Arizona-----------------------------------------------------------------------On May 27, 1999, the Company was sued on behalf of a class of Floridadebtors in the United States District Court for the District of Florida inan action entitled McIntyre v. Credit Store Inc. On May 21, 1999, theCompany was sued on behalf of a class of Arizona debtors in the UnitedStates District Court for the District of Arizona in an action entitledBingham v. The Credit Store, Inc. Both actions allege that communicationssent by the Company to class members violate the Fair Debt CollectionPractices Act and similar state laws in connection with attempts to collectout of statute debt. Both complaints seek monetary damages and declaratoryjudgments that the Company's mailers violate statutory provisions.

CREDIT STORE: May Settle for Debt Collection Suit in NY Filed in Feb.---------------------------------------------------------------------In February 2000, the Company was sued in United States District Court forthe District of New York in an action entitled Sturm v. Bank of New York.The suit alleges that communications sent by the Company to class membersviolate the Fair Debt Collection Practices Act. The complaint seeksmonetary damages for the alleged violations as well as for restitution andunjust enrichment. While the Company has admitted no liability orwrongdoing, the parties have negotiated and are in the process of executinga settlement agreement. The settlement agreement will be subject to courtapproval.

CREDIT STORE: Settlement for 1996, 1998 Debt Collection Cases Proposed----------------------------------------------------------------------During 1996 and 1998, Credit Store Inc., and certain former officers anddirectors were sued in three class actions. These class actions generallyallege that the persons in the class were purportedly solicited tovoluntarily repay debt that had been discharged in bankruptcy, and that theCompany had violated other provisions of federal or state law, includingviolations of the Bankruptcy Code, the Fair Debt Collection Practices Act,the Truth in Lending Act, various state consumer protection laws and, inone case, RICO.

The Company was sued (i) in 1996 in the United States District Court forthe Northern District of Illinois in an action entitled Louis G. Apostol,as Administrator for the Estate of Curtis Kim v. M. Reza Fayazi, et al.;(ii) in 1998 in the United States District Court for the District of RhodeIsland in an action entitled McGlynn v. The Credit Store, Inc., et al.; and(iii) in the United States District Court for the Northern District ofIllinois in an action entitled Le v. The Credit Store, Inc., et al. Thecomplaints in these actions seek monetary damages, declaratory judgmentsthat the agreements reached with plaintiffs have no legal effect,injunctive relief to prohibit defendants from purchasing or selling debtsthat have been discharged in bankruptcy and to rescind any such agreements,and to require cessation of collection efforts and the removal of debtsfrom credit reports, and in one case criminal contempt. While the Companyhas admitted no liability or wrongdoing, the parties have executed asettlement agreement, which also consolidated these three cases forsettlement purposes. The settlement agreement will be subject to courtapproval.

E. COLI: In Canada, Members of Lawsuit Vying to Speak in Inquiry----------------------------------------------------------------The New Democratic Party should be able to participate in an inquiry intoWalkerton's contaminated water because of allegations made by Premier MikeHarris, Mr. Justice Dennis O'Connor was told. "Our clients have been blamedfor the crisis by the current Premier of Ontario," lawyer David Jacobs saidin arguing that the party, former environment minister Bud Wildman andformer natural resources minister Howard Hampton, who is now party leader,should be given standing at the public inquiry.

When he visited Walkerton on May 26, the day after the public first learnedof the E. coli bacteria that left six dead and 2,000 sick, Harris said itwas an NDP government that had made municipalities responsible for payingfor water testing.

Jacobs said that, normally, the lawyers for the Ontario government wouldalso represent previous governments, "but we can't expect that to happenhere in view of the Premier's remarks." O'Connor, who's heading theinquiry, conceded that it's not unprecedented for political parties to begiven status, citing as an example the provincial Liberal party at the 1989inquiry headed by Mr. Justice Lloyd Houlden into a fundraising scandalinvolving Patti Starr, Tridel Corp. and some provincial Liberals. But hesuggested the proper time for a political party to be involved is afterrecommendations are made. "My clients don't intend to make this a forum forpolitical debate," Jacobs responded. "We're here as part of thefact-finding process."

Toronto lawyer Frank Marrocco, who will act for the province, said in aninterview he understands the NDP's concern. "I guess if that's the way theyfeel, it's wise of them to seek separate representation." 'My clients don'tintend to make this a forum for political debate.'

NDP lawyer David Jacobs

The NDP is among about 40 groups and individuals seeking standing - astatus that will give them the right to question witnesses and help shapethe inquiry's direction.

O'Connor, who will be living in a rented Walkerton house during theinquiry, has set three days aside to hear their arguments and will releasehis decision early next week.

Four groups are vying for the right to speak for the people of Walkerton:Concerned Walkerton Citizens; the Walkerton Community Foundation; the localchamber of commerce; and members of a proposed class-action lawsuit.

Meanwhile, water from Well 7 flowed through the town's pipes again onSeptember 5 after being turned off on Monday as part of a hydrogeologicalstudy. (The Toronto Star, September 6, 2000)

EAST BATON: Citizens Committee Works on 44-Year-Old Desegregation Case----------------------------------------------------------------------Best of luck to the citizens committee that wants "an end" to the44-year-old desegregation case that is hobbling the East Baton Rouge publicschools.

However, untangling the legal situation takes far more than goodintentions. Nor can any self-appointed panel speak for the elected membersof the School Board, who have ultimate responsibility for carrying out anynew version of a desegregation plan.

There is little new in what the committee, headed by attorney BraceGodfrey, is proposing to the plaintiffs in the case in U.S. District Court.An outline of the Godfrey committee proposals is intended as the beginningof negotiations among the parties in the case.

The outline would require continuing and substantial financial investmentin inner-city schools, but Superintendent Gary Mathews and board membershave been doing that, and they have been willing to do that all along withcontinued judicial supervision, in exchange for release from other, morecontroversial aspects of the case.

The citizens committee proposal would create some sort of committee ofoverseers of the desegregation plan, which presumably would give theplaintiffs the U.S. Justice Department, the NAACP and survivors of theoriginal case - a place at the table in terms of carrying out a settlement.However, they already have enormous influence in the case in U.S. DistrictCourt - too much influence, in our view, given their record ofintransigence in the case. We doubt they will be willing to give up today'sjudicial oversight for tomorrow's citizen oversight.

U.S. District Judge John V. Parker told the committee to hold itsdiscussions, giving them 100 days to work with the other parties in thecase.

In an order last week, Parker said that the goal of the discussions is "toreach an amicable resolution on how defendants can desegregate the EastBaton Rouge Parish school system consistent with the 1996 consent decree,the Constitution and applicable federal law." The judge is apparently farfrom changing his view that the School Board has failed to live up to the1996 plan that was intended to be a path toward resolution of the case.

The judge also patronizingly refers to the citizen committee asrepresenting "a renewed interest and attitude on the part of the people ofEast Baton Rouge Parish in assuming the responsibility for the education ofchildren that can lead to an environment in which this community can onceagain assume control of its own public school system consistent with theconsent decree."The judge is apparently unpersuaded that the community -which raised taxes for the support of the schools in 1998, for the firsttime in 30 years - has had an appropriate "interest and attitude" in publiceducation.

Such an Olympian disdain for the day-to-day struggles of the community toimprove public education does not bode well for a settlement.

The Godfrey committee's proposal was supported by Gov. Mike Foster,doubtless in his capacity as community leader rather than defendant in thecase. That distinction may be lost on the plaintiffs.

We favor some sort of agreement that will end, at the least, thepupil-assignment portion of the case. The proposals by the Godfreycommittee are not bad ones, at least judging from the outline.

Further, the Justice Department and plaintiffs in the case should recognizethat the School Board has a stick in that it has declared its willingnessto appeal any significant conflicts about the 1996 consent decree to theU.S. 5th Circuit Court of Appeals. Depending on whether there are, indeed,avenues of appeal, the 5th Circuit - a generally conservative court - mightbe willing to reverse rulings by Parker that support the Justice Departmentand the plaintiffs.

It is not a part of the formal court record, but it is well-known by nowthat this case has outlived its usefulness in the lives of students in theEast Baton Rouge Parish schools. The plaintiffs and the Justice Departmentblame the School Board, and the School Board blames the plaintiffs asmillions of dollars are spent on legal wrangling. The money could be betterspent on education.

There is also a great deal of merit in the argument that, contrary to the1996 consent decree, a number of temporary classroom buildings are neededon a large number of campuses. The plaintiffs and the Justice Departmenthave tried to force the board to eliminate most of those, and the boardagreed four years ago.

That is a promise that was broken by the School Board. It has neveracknowledged any fault on the issue - board members never acknowledge anyfault at all, preferring to kick around the judge, the NAACP and theJustice Department - and that doubtless rankles the plaintiffs. But on theeducational merits of the case - the need for more classrooms for computerlabs and dance classes, and myriad purposes - the consent decree should bechanged. The Godfrey committee proposals are a basis for doing that whileretaining the obligations in the consent decree for extensive repairs andplacement of new buildings over time in inner-city schools.

That is something the School Board's opponents want, and they shouldconsider carefully the dangers of a course of intransigence, and endlesslitigation in a fading cause. (The Advocate (Baton Rouge, LA.), September5, 2000)

Phillips filed the suit in Madison County Circuit Court, alleging that Fordsold vehicles with a known latent defect that first appeared in themid-1980s after the auto maker altered its painting process. The newprocess resulted in paint adhesion loss or "delamination," she claimed, andFord concealed the defect rather than recall the vehicles or disclose theproblem to consumers.

Phillips seeks to represent a class of persons who currently own 1988--1997Ford vehicles that were painted without the proper primer-surfacer and thusare subject to delamination. The class excluded residents of Louisiana andTexas.

The two counts of the complaint allege violations of the Illinois ConsumerFraud Act and common-law fraud, and ask the court to order Ford to repairthe vehicles or pay for such repair. The complaint explicitly states thatPhillips' individual claim is "worth less than $75,000, inclusive of alldamages and fees."

Ford removed the action to U.S. District Court for the Southern District ofIllinois; Phillips moved for remand.

Judge Herndon rejected the company's contention that the claims would meetthe $75,000 federal jurisdictional minimum. "Ford attempts to paint afrightening picture of the administrative headaches and financial costsinvolved in a complex process of owner identification, owner notificationand vehicle inspection. But the complaint does not ask that this process beimplemented, and many of the costs listed by Ford would be incurred as partof a normal class action suit."

GENERAL MOTORS: CT Judge OKs Trade Practice Claim in Brake Failure Case-----------------------------------------------------------------------A state court judge has ruled that a claim under the Connecticut UnfairTrade Practices Act may go forward along with a defect claim, despite anexclusivity provision in the Connecticut Product Liability Act. Kristofakv. General Motors Corp. (Automotive Litigation Reporter, August 15, 2000)

GLIATECH, INC: Milberg Weiss Files Securities Lawsuit in Ohio-------------------------------------------------------------The law firm of Milberg Weiss Bershad Hynes & Lerach LLP announces that aclass action lawsuit was filed on Sept. 5, 2000, on behalf of purchasers ofthe securities of Gliatech, Inc. (NASDAQ: GLIA) between April 9, 1998 andAugust 29, 2000 inclusive. A copy of the complaint filed in this action isavailable from the Court, or can be viewed on Milberg Weiss' website at:http://www.milberg.com/gliatech/

The action, numbered 1:00 CV 2236, is pending in the United States DistrictCourt, for the Northern District of Ohio, Eastern Division, located at 201Superior Ave. N.E., Cleveland, Ohio 44114 against defendants Gliatech,Thomas O. Oesterling (Chairman (until September 1, 2000), President andChief Executive Officer) and Rodney E. Dausch (Executive Vice President -Finance), Secretary and Chief Financial Officer). The Honorable Paul R.Matia is the Judge presiding over the case.

The complaint alleges that defendants violated Sections 10(b) and 20(a) ofthe Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,by issuing a series of material misrepresentations to the market betweenApril 9, 1998 and August 29, 2000, thereby artificially inflating the priceof Gliatech common stock. Specifically, the Company failed to disclose thatit had provided inaccurate data to the U.S. Food & Drug Administration inorder to gain approval to market its leading product, ADCON(R)-L. When thisdisclosure become publicly known, Gliatech was forced to terminate apreviously announced merger with Guilford Pharmaceuticals and the price ofGliatech's stock plummeted 65%.

Requests for appointment as lead plaintiff can be made to the Court nolater than November 6, 2000.

HMOs: Bush Unveils $158B Medicare Reform Plan Prescription Drug Included------------------------------------------------------------------------The Allentown Morning Call (9/6, McDermott) reported, "George W. Bush,surrounded by two dozen residents of an Allentown senior citizenshigh-rise, proposed a $158 billion Medicare makeover that local elderadvocates worry is too complicated for many and too undependable for most."Bush "called for $110 billion to modernize the program created in 1965 and$48 billion for a prescription drug plan that would cover the first fouryears of a transition to a better Medicare program."

The Morning Call continued, "Hammered in recent weeks by opponent VicePresident Al Gore for a lack of specifics on his Medicare and prescriptiondrug plans," Bush "accused the Clinton administration of squanderingchances to revive an ailing program over the past eight years," saying, "Atfirst, the Clinton-Gore administration proposed an ill- advised governmenttakeover of American medicine that was wisely rejected by Republicans,Democrats and the American people." Since then, "the administration hasbeen too partisan -- playing politics at the expense of reform."

Bush's "visit was brief. He was accompanied by his wife, Laura, and runningmate Dick Cheney." Bush "entered, shook a few hands, made his 30-minutespeech and left without answering questions." Yet "his address waswell-received by the small group of tenants invited to the crowdedcommunity room, where they were almost outnumbered by Republican leaderswho included Gov. Tom Ridge; US Rep. Pat Toomey, R-15th District; AllentownMayor William L. Heydt; and state Sen. Charles Dent, R- Lehigh." Bush"would have been hard pressed to find a better backdrop for hisannouncement.

Only Florida has a higher concentration of elderly people thanPennsylvania, where 16 of every 100 people are 65 and older. Had Bush goneto Florida, however, it might have signaled a weakness in holding a statewhere his brother Jeb is governor."

The Philadelphia Inquirer (9/6, Wilson) reported, "Bush unveiled a plan onTuesday to spend almost $200 billion on reforming Medicare and providingimmediate prescription drug benefits to end the elderly's 'cruel choice'between food and medicine." Bush "promised not to raise taxes or theeligibility age for Medicare and said a bill proposing drug benefits wouldbe the second he sent to Congress after education reform if he won the Nov.7 election." He "proposed to provide $48 billion immediately in directsupport to states over four years to cover the full costs of a prescriptiondrug program for seniors with incomes below $11,300 for individuals and$15,200 for a couple." That money "also would cover part of the costs ofmedicines for individual seniors with incomes up to $14,600 and couplesearning up to $19,700."

ABC News (9/5, Jennings) reported last night, "Today Mr. Bush made publichis plan for reforming Medicare, helping senior citizens cope with theever-increasing price of prescription drugs." ABC (Reynolds) added, "Therewere perhaps 40 senior citizens in the room this morning, surrounded bytwice as many reporters, when Bush unveiled his Medicare plan and coupledit with a dig at his opponent." Bush was shown saying, "Vice President Goretalks about the people versus the powerful. For eight years, he has beenthe powerful. And on health care, he has little to show for it." ABC added,"By contrast, the Governor today proposed to send $48 billion to thestates, starting next January, to help them make prescription drugsaffordable for senior citizens. Bush would then follow that with a $110billion outlay, allowing the poorest seniors to get their prescriptiondrugs for free. And for those with higher incomes, he would pay 25% ofthose health insurance premiums. Bush would also spend $40 billion onMedicare to restore cuts made to the program to balance the Federal budgetin previous years." Bush was shown saying, "Keeping the promise of Medicareand expanding it to include prescription drug coverage will be a priorityof my administration." ABC added, "Under the Bush plan every senior wouldbe entitled to the current set of Medicare benefits. No one, regardless ofincome, will have to pay more than $6,000 a year for prescription drugs.And eventually for any Medicare benefit. And he would let seniors chooseamong private plans outside Medicare that may better fit their healthneeds."

CNN (9/5, Inside Politics, Woodruff) reported "some of the politicalmotivation behind" Bush's drug prescription plan "was evident today, whenBush spent nearly half of his speech criticizing Al Gore's rival plan andthe Administration's record." CNN (Crowley) added that in Pennsylvania, "abattleground state where 16 percent of the population is 65 and older andat a time when Al Gore has been hammering him for failing to address theproblem of senior health, George Bush is trying to turn it around." Bushwas shown saying, "Vice President Gore talks about the people versus thepowerful. For eight years, he has been the powerful, and on health care, hehas little to show for it."

CNN added Bush "unveiled a nearly $200 billion Medicare plan. It includes $40 billion for Medicare providers, money cut during the ClintonAdministration, and $110 billion for reform. Bush's aim is to provideseniors with a choice of public and private insurance plans." Whenimplemented, Bush "says his Medicare program would fully pay for Medicarepremiums, including prescription drugs, for senior couples making $15,200or less, provide subsidies on a sliding scale for those above that incomelevel, and pay for at least a quarter of the cost of every senior'sprescription drug coverage." Because it "will take a while to put some ofthis in place," Bush "also proposes sending $48 billion to statesimmediately to help pay the drug costs for low-income seniors, money thatBush says could be there as early as 2001." Bush was shown saying, "Even ifthe Gore plan passes, no one will get full drug benefit for eight years.That's a detail you don't hear much in his speeches." (The Bulletin'sFrontrunner, September 6, 2000)

The majority endorsed the trial court's refusal to expand New Jersey'ssecurities fraud laws to allow shareholders to sue i-Stat Corp. officersand directors unless they were directly deceived by information from thecompany, i.e., they cannot claim they were fooled by the allegedly inflatedstock price. A three-justice minority voted to affirm an appellate court'sdecision to reinstate the suit on grounds that the reliance element infederal securities laws and state common-law fraud is the same.

Defense attorney Larry Rolnick of Lowenstein Sandler in Roseland, N.J.,said this is the first New Jersey Supreme Court decision on theapplicability of the fraud-on-the-market theory to New Jersey common-lawfraud claims and the first state supreme court to comprehensivelyre-examine the fraud-on-the-market theory. He said the majority'sdisparaging view of that theory -- and the "efficient market" concept thatunderlies it -- certainly makes the state court route less appealing toclass action attorneys. Additionally, its reasoning may influence federaljudges who are examining the reliance element to calculate damages insecurities fraud actions, Rolnick predicted.

"This should help stem the tide of state court cases against directors andofficers not just in securities matters, but in other areas such asconsumer product actions," Rolnick said. He noted that after the appellatecourt in this case allowed plaintiffs to proceed with the common-law fraudcharge without showing reliance, another New Jersey appellate court usedthe same reasoning in refusing to dismiss a consumer product case based oncommon-law fraud.

Rolnick said had the decision gone the other way, it could have triggered afuture wave of insurance coverage litigation because most director andofficer insurance policies do not cover judgments or settlements forfraudulent acts.

Plaintiff Susan Kaufman charged that four of the company's officersportrayed Stat products as achieving a greater market share and acceptancein the medical community than was actually the case. She charged bothcommon-law fraud and negligent misrepresentation.

She admitted that she bought her 100 shares of i-Stat from a broker and didnot see any of the alleged misinformation that purportedly inflated thestock price. Consequently, she had to rely on the fraud-on-the-markettheory, i.e., she assumed that the high stock price indicated the company'sworth. The theory is common in securities fraud suits based on Section10(b)5 of the Securities and Exchange Act of 1933 but not in state courtactions that are based on common-law fraud.

Defendants moved for summary judgment for failure to show reliance.

Plaintiffs cited to Rosenblum v. Adler, 93 N.J. Sup. 324 (1983), in whichthe state high court held that an accounting firm may be liable fornegligence to all reasonably foreseeable recipients of its statement for aproper business purpose. Plaintiffs argued that the common thread in bothfederal and state securities cases is the element of foreseeability -- adifferent type of reliance from the receipt of direct information from anofficer or director.

Defendants countered that New Jersey courts have never acceptedfraud-on-the-market theory in any form.

The trial court judge agreed. A state appeals court affirmed the dismissalof the negligent misrepresentation claims, but reinstated that part of thesuit that was based on common-law fraud because it found that plaintiff'sbelief in the market price as an indicator of the company's worth wassufficient to satisfy the reliance requirement for that section of statelaw.

On appeal to the state high court, Justice Jaynee LaVecchia, writing forChief Justice Deborah T. Poritz and Justices James H. Coleman Jr. and PeterG. Verniero, said that under state law, neither negligent misrepresentationnon common-law fraud can rest on a fraud-on-the-market theory. The justicenoted that no other state appellate court -- or any federal court in NewJersey -- had permitted fraud-on-the-market to satisfy the reliance elementof common-law fraud.

"Since the common law of fraud covers areas other than securities, then theplaintiffs in this case are asking this court to expand the common law,potentially beyond the arena of securities, in an action of a sort thatCongress substantially has barred our courts from hearing in the future,"the majority said, referring to the Uniform Securities Litigation Act of1998. The USLA, in an attempt to plug what some saw as a loophole in thePrivate Securities Reform Act of 1995, forced most class action securitiescases into federal court. However, the i-Stat case predated the USLA.

The majority also noted that since the U.S. Supreme Court decided thelandmark Basic v. Levinson, 465 U.S. 224 (1988) (see Corporate Officers &Directors Liability LR, March 9, 1998, P. 4,708), "no state court with theauthority to consider whether Basic is persuasive has chosen to apply it toclaims arising under its own state's laws." The majority went on to examinethe underlying principle of the "efficient market" and found it nebulous.

Justice LaVecchia noted that the plaintiff could have used thefraud-on-the-market theory to support standard securities fraud claims inthe federal courts but chose not to do so.

Justice Gary Stein, writing for Justices Virginia Long and Danie l O'Hern,lined up with the appellate court's reasoning. He said the majority focusedon process rather than result, but "proof that a party deliberately madefalse representations with the intent that they be communicated to othersfor the purpose of inducing others to rely upon them may satisfy thereliance element of common law fraud."

Besides, the minority added, fraud-on-the-market is a refutable presumptionof reliance, i.e., the defendants have the opportunity to show that thealleged misrepresentation did not lead to the distortion of the stock priceor that an individual plaintiff would have traded -- or not traded --despite the information. The fact that the plaintiffs passed over theavailable federal remedy should not hinder them in state court because thefederal securities laws were adopted as a supplement, not a replacement tostate law, the minority wrote.

Plaintiffs are represented by William Fredericks and Miles Tepper of NewYork.

KEYSTONE FINANCIAL: Stockholders Approve $ 1 Bil Merger with M&T Bank---------------------------------------------------------------------Keystone Financial Inc. stockholders on Tuesday approved a merger with M&TBank Corp. but didn't get an opportunity to publicly comment on the $ 1billion deal. In May, the CAR reported on M&T's announcement of itsintention to buy Keystone Financial. At that time, Keystone's stock pricehad plunged 47 percent following a $30 million settlement for a classaction on alleged mishandling of investments.

Executives of Harrisburg-based Keystone said 91.4 percent of shareholderswho cast ballots voted for the merger. Keystone's 177 banking offices inPennsylvania, Maryland and West Virginia will become M&T banks on Oct. 6 ifM&T stockholders approve the acquisition.

Results of the M&T vote will be announced Sept. 19 during a shareholders'meeting at M&T's headquarters in Buffalo, N.Y. "The vote is running 99percent in favor" of the merger, Robert G. Wilmers, president and chiefexecutive officer of M&T, said after the meeting of Keystone shareholdersat the Hilton Harrisburg & Towers.

Several Keystone shareholders among the 75 people who attended the meetingwere disappointed that a question-and-answer session was not held after thevote was announced. "I assumed they were going to have a public commentperiod," said Larry Wittig, who said he owns 31,175 shares of Keystonestock.

Wittig said he would have told Keystone executives: "This deal stinks.Three years ago they should have changed management." Wittig said he willreceive $ 20,538 less in annual dividends as a result of the merger. "I'mdisappointed with the fiduciary responsibility of the Keystone board," hesaid.

John Fecko, who said he holds 7,000 Keystone shares, said the 15-minutemeeting wasn't worth the inconvenience of taking off from work and findinga parking space. When asked if he favors the merger, he said, "Notparticularly. The only good thing that's come out of it is the [Keystone]stock's appreciated" 46.4 percent since the day before the deal wasannounced on May 17.

Campbell said there was "no need to" open the floor to questions because"shareholders overwhelmingly voted in favor of this" merger. Beforeadjourning the meeting, Campbell said shareholders with questions orcomments about the merger could meet privately with Keystone executives infront of the podium after the session. "I invited them up to talk, so theyhad the opportunity," Campbell said.

Campbell will remain with M&T as a vice chairman and become chairman of thebank's Pennsylvania operations. Keystone's other two top executives, MarkL. Pulaski and Ben G. Rooke, will step down after the merger. Pulaski ispresident of Keystone's wealth-management division, and Rooke is vicechairman, general counsel and secretary.

After recounting the 16-year history of Keystone Financial, including lastyear's settlement in a financial scandal involving a Keystone subsidiary,Campbell said, "The time is now to pass the torch to someone better to runwith it."

M&T, he said, "has a proven track record of creating exceptional value forits shareholders, a dedication to customer service and a commitment to thecommunities it serves."

Keystone earlier this year agreed to pay $ 50 million to 45 schooldistricts and five municipalities in Pennsylvania to settle a class-actionlawsuit filed against one of its subsidiaries, Mid-State Bank.

John Gardner Black, an investment adviser used by the local governments andschool districts, including Northern Lebanon School District, pleadedguilty to mishandling investments, resulting in $ 71 million in lossesbetween 1994 and 1997. Mid-State Bank provided custodial services forBlack's business, Devon Capital Management.

M&T, which plans to buy Keystone for $ 650 million in stock and $ 350million cash, will split its stock 10-for-1 once the deal closes. Keystonestockholders will receive a half-share of M&T stock for every Keystoneshare. (The Patriot-News, September 6, 2000)

LAND REFORMS: Zimbabwe's White Farmers to Resume Legal Action-------------------------------------------------------------Zimbabwe's embattled white farmers decided Wednesday to resume their legalbattle against the government's controversial land reforms, their unionleader Tim Henwood said. "This class action will specifically challenge thepower to take land from an individual without compensation," Henwood toldan opening session of the Commercial Farmers Union (CFU) congressWednesday. "The CFU does not wish to delay the implementation of a plannedand orderly land reform program which we support," he said.

The new law suit will attack the validity and constitutionality of the landreform law and the recently-launched "fast-track" program, under which thegovernment seeks to take white farms to give to blacks without payingcompensation, CFU director David Hasluck said.

The CFU last month withdrew its law suits against the government over itshandling of the land reforms, which are taking place against a backgroundof often-violent farm invasions led by liberation war veterans. The CFU hadsaid it had hoped its differences with the government could be resolvedthrough dialogue, but not much dialogue has taken place, which has led toto renewed pressure within the union to relaunch a legal battle.

The new case will challenge the planned acquisition of the nearly 2,000farms identified by the government so far, and seek to force the governmentto enforce a High Court ruling ordering squatters off the farms. Theearlier cases had argued that the government's program amounted to racialdiscrimination and challenged the constitutionality of the land reformprogram.

The white farmers had last month dropped a constitutional challenge theyhad launched in the Supreme Court, arguing that the government's plans totake their farms was racially discriminatory. But CFU director DavidHasluck said since withdrawing the suits, "We have not seen any improvementin the dialogue." The stalemate with government led to renewed pressurewithin the union to relaunch a legal battle.

Hasluck said the new case was a broader attack on the program. The new caseshould be formally filed by the end of the week, he added. They also soughta High Court order for the government to remove the war veterans andlandless villagers who have invaded more than 1,600 of their farms sinceFebruary. (Agence France Presse, September 6, 2000)

MEMBERWORKS INC: Emerges from Privacy Suit in CA; Defends Suit in MN--------------------------------------------------------------------On July 2, 1999, a purported class action was filed by Consumer Cause Inc.against the Company and other defendants in the California Superior Court,San Francisco County. The suit alleged that the Company and the otherdefendants violated their customers' right of privacy and the Fair CreditReporting Act and sought unspecified monetary damages. The Company filed ademurrer and the action was dismissed.

On July 7, 1999, a purported class action was instituted by plaintiffsKathryn Rosebear and Anne Bergman against the Company and other defendantsin the United States District Court, District of Minnesota. The suit, whichseeks unspecified monetary damages, alleges that the Company and the otherdefendants violated their privacy policies and Minnesota consumer law. TheCompany believes that the allegations made in this lawsuit are unfoundedand the Company will vigorously defend its interests against this suit.

MTBE CONTAMINATION: Lieberman & Blecher Files Suit in NJ Superior Court-----------------------------------------------------------------------Following California and New York's lead, a Princeton, N.J. law firm hasfiled a lawsuit against the owners and operators of a gasoline station,alleging MTBE contamination in the state. The lawsuit, filed in New JerseySuperior Court Aug. 24, is on behalf of the nearly 100 current or formerresidents of Bayville, who lived near a Cumberland Farms market and gasstation, and used private wells. The suit alleges that a gasoline tank atthe station had a hole in it and MTBE seeped into the drinking wells.

"This case is about the reckless contamination and poisoning of numerousindividual drinking wells," according to the allegations filed by Lieberman& Blecher. To aide with the numerous plaintiffs, they have hired asco-counsel the California law firm Masry & Vititoe, a firm that hasrepresented groups in MTBE lawsuits in other states and gained notoriety bybeing featured in the film "Erin Brockovich."

According to the suit, records from the state Department of EnvironmentalProtection (DEP) indicate that a former retail gasoline service stationowned and operated by Gulf Oil Corp., now Chevron USA, and Cumberland Farmsto be the exclusive or primary source of the drinking water contaminationin the community.

"The defendants in this action destroyed and contaminated the community'sdrinking water supply by placing gasoline containing MTBE and [BenxeneToulene Ethylbenzene and Xylene or BTEX into the community. They also]negligently and intentionally plac[ed] MTBE into the stream of commercewithout taking proper precautions and without warning of MTBE's propensityto contaminate drinking water," the suit alleges.

This case has not been long in the making, according to the suit. In May, aplaintiff had his water professionally sampled and learned it wascontaminated with MTBE. Not long after, the state DEP determinedcommunity-wide sampling was required and, under the DEP's direction,Cumberland began testing private wells in Bayville. In June, Cumberlandtook several other groundwater samples taken in Bayville which revealedthat MTBE and/or BTEX contamination was present at levels well above theNew Jersey health advisory level for both chemicals. "Many plaintiffs'private wells contained MTBE above New Jersey's maximum level and at leastfive plaintiffs' well contained MTBE at 300 ppb," the suit added. Out of200 wells tested, Cumberland found eight with levels of 70 ppb or higher,which is the legal limit, according to DEP spokesman Rob Schmitt. But theBayville area is still contaminated by MTBE and BTEX, the suit alleges.Schmitt had no comment specifically on the lawsuit, but said that under thedirection of the DEP, Cumberland Farms removed the leaking tank and 366tons of contaminated soil in July.

For anyone's well that was over or near the limit, Cumberland offered tohook them into the municipal water supply, Schmitt said. But that's nottrue, Shari Blecher of Lieberman & Blecher told Oxy-Fuel News. Cumberland"only helped a handful of people" she said. They didn't help residents withlevels below 70 ppb or those that had no detection on that day. The suit ischarging Cumberland with negligence, strict products liability, negligentinflictions of emotional distress and fear of future injury and quality oflife damage. Cumberland Farms could not be reached for comment and Chevronspokesman Dave Sander said Chevron had not seen the lawsuit and said it wasinappropriate to comment. -Rachel Gantz (OXY-FUEL NEWS, September 4, 2000)

NETWORK SOLUTIONS: D.C. Lawyer Takes Third Shot at Web Site Overcharges-----------------------------------------------------------------------William Bode hopes the old adage "three times is a charm" holds true. Theco-founder of D.C.'s Bode & Beckman has gone to the Eastern District tofile his third class action alleging that Herndon-based Network SolutionsInc. , empowered by the federal government, swindled everyone whoregistered an Internet domain name between September 1995 and November 1999out of some $ 800 million.

Bode hasn't fared too well in his first two challenges to what was then a $100 charge NSI and federal authorities levied on individuals and companiesthat sought to register domain names. One case was dismissed by a federaljudge in the District. However, the judge in that case ruled that $ 30 ofthe fee was an unconstitutional tax, and several weeks later the governmentdid away with the fee. Bode voluntarily pulled a second case.

But now, he's back for the remaining $ 70.

On Aug. 4, a group led by Middleburg winery the Chrysalis Vineyards Co.,filed a class action seeking $ 1.7 billion from the Commerce Department,the National Science Foundation, and Network Solutions. Bode says anagreement between the government and NSI to allow the company to startcharging Web site operators was unauthorized under federal law, and thatNSI has been enriching itself as the ranks of domain name registrants hasswelled from 100, 000 in 1995 to more than seven million.

"This is an example of gross governmental misfeasance to the detriment ofthe public," Bode says. "It will be a horrible precedent if the governmentis allowed to offer a private company a monopoly just because thetechnology is new."

In his complaint, Bode says NSI is only authorized to charge its costs forthe service. While NSI currently asks $ 70 to register for two years a dot-com, dot-org, or dot-net, the complaint alleges it actually costs thecompany about $ 1 to do the work.

Finally, the case alleges that a policy shift in 1997 that opened up dot-net and dot-org names to commercial enterprises-rather than just ISPs andnonprofits, respectively-has forced the named plaintiffs and others to payto secure as many as three Web sites when they otherwise would only haveneeded one.

As the Wilmer, Cutler & Pickering attorneys representing NSI in the caseare quick to point out, much of what Bode alleges is not new. In 1997, hefiled a similar suit in U.S. District Court for the District of Columbia.In that case, Thomas v. Network Solutions Inc., all the counts were eitherdropped or dismissed-except one. U.S. District Judge Thomas Hogan initiallyupheld the claim that a $ 30 portion of the fee to control a domain namefor two years-money that went to an Internet infrastructure tax controlledby the National Science Foundation-was unconstitutional.

Around the same time, Congress retroactively authorized the $ 30 tax, buteliminated it from future use. At the government's request, Hogan thendismissed the last vestiges of Bode's case.

Some of the strands still linger. Although Bode did not prevail beforeJudge Hogan, the government altered its policy.

Try, Try Again

Bode attempted again in July to bring the suit in the Northern District ofCalifornia, but NSI got the case transferred back to the District, wherethe U.S. Court of Appeals for the D.C. Circuit had upheld Hogan's decisionin the earlier case. Bode dropped the case and filed a new one in theEastern District of Virginia.

"Plaintiffs counsel brought the case in California in an obvious effort toshop for a forum as far away as possible from the District of Columbia,"Wilmer, Cutler partner Michael Burack, one of the attorneys representingNSI, says in court papers. "Three days later, they crossed the Potomac tofile the instant case-his third one-in this court."

Network Solutions is asking that Bode's case be dismissed.

If Bode gets his day in court, the case will turn on the curiousrelationship NSI has had with the government since 1992.

That was the year NSI was selected by the National Science Foundation toprovide domain name registration services over a five-year period until thethe services could be privatized.

Under the the contract, the National Science Foundation would pay NSI $ 1million annually to register Internet domain names to the public withoutcharge.

But in May 1995, NSI asked for the National Science Foundation's permissionto impose a revenue sharing arrangement in which Network Solutions wouldcollect a $ 100 registration fee and split it 70-30 with the government.According to NSI's counsel, the $ 1 million per year did not cover thegrowing expense of registering the domain names.

As part of that deal, the National Science Foundation and NSI eliminated aclause in their contract that prohibited charging citizens more than thecosts of registration. As a result, alleges Bode, Netizens have beenfleeced for about $ 800 million through November 1999, when NSI lostmonopoly control of the registration process. The Department of Commercetook over supervision of the registration process from the National ScienceFoundation in 1997 to oversee opening up domain name registrations to othercompanies.

"The fees were picked arbitrarily by Network Solutions, which were thenapproved by the National Science Foundation, without a public hearing onreasonableness or any internal review," Bode says.

"We raised these issues in the Thomas case, but we were concentrating onthe $ 30 fee more than anything," Bode says. "We've resolved that, and nowwe are focusing on this."

Bode also claims an antitrust violation stemming from NSI's 1997 decisionto allow commercial enterprises to register as .org or .net, as well as.com. In court papers, he says that policy forces companies like Chrysalisto snap up-and pay for-more domain names.

Burack's response is that Bode has his argument "exactly backwards." Hesays that NSI is actually opening the market, not undermining it, with thatpolicy.

He writes: "The idea that a seller-even a monopolist-violates the antitrustlaws by offering to sell its services to anyone who wants to buy them isjust plain silly." (Legal Times, September 4, 2000)

POSTAL SERVICE: NY Times Depicts Grievance of Workplace Racism--------------------------------------------------------------In the early 1990's, the United States Postal Service had an employeecrisis on its hands. Not the workplace shootings that made headlines andadded the phrase "going postal" to the American vocabulary of violence.Those incidents, while often deadly, were isolated.

What really threatened the agency's productivity and morale was anavalanche of complaints by angry, frustrated employees to the federal EqualEmployment Opportunity Commission. For years, charges of racialdiscrimination, sexual harassment and other management abuses poured intothe watchdog agency from the Postal Service, and the volume of informalcomplaints had built up to an incredible 30,000 filings a year, more thanfrom any other single employer. Some of the complaints escalated intocostly litigation, while others festered.

But in 1994 as part of a settlement of a class-action lawsuit, lawyers atthe Postal Service, one of the nation's largest employers, started one ofthe most ambitious experiments in dispute resolution in American corporatehistory. They created a program called Redress to settle disputes usingneutral outside mediators, and tested it in a few cities before rolling itout nationally in 1997.

The results were spectacular: in the first 22 months of full operation,from September 1998 through June of this year, 17,645 informal disputeswere mediated under Redress and of those, 80 percent were resolved.

During the same period, formal complaints, which peaked at 14,000 by 1997,dropped 30 percent. The lawyers estimate that the program has saved theagency millions of dollars in legal costs and improved productivity, to saynothing of the gains in intangibles like job satisfaction.

Now, two of the Postal Service's lawyers, Cynthia J. Hallberlin, formerchief counsel, and Mary S. Elcano, former general counsel, have left forprivate practice at the Brown & Wood law firm in Washington, and are takinga similar program, which they have named Wins, on a road show. They areconvinced that if mediation worked wonders for the Postal Service, it coulddo so at any company or organization.

Already, the World Bank has signed on for a review of its mediationprogram, and others, including investment banks, dot-coms and recognizedbrand-name manufacturers, are interested, the lawyers say. What is sellingthem, they say, is Redress's record.

Corporate America certainly needs the help. High-profile racialdiscrimination and sexual-harassment class-action lawsuits filed in recentyears against industry giants like Texaco and Coca-Cola are only the tip ofthe litigation iceberg. Employment discrimination cases nearly tripledbetween 1990 and 1998, to 23,735 filings in federal district courts,according to the Justice Department.

To be sure, companies are not sitting on their hands. A survey of Fortune1,000 companies in 1997 by the Cornell Institute on Conflict Resolutionfound that the majority were doing some form of what is known asalternative dispute resolution to avoid litigation.

But Ms. Elcano and Ms. Hallberlin say they possess one thing that no oneelse can offer, a huge database of statistics and exit surveys, which theysay proves how valuable their form of mediation, called transformativemediation, was to postal workers.

In it, the parties involved control the process and the outcome.

"We have found that companies are very interested in transformativemediation," Ms. Hallberlin said, "because of its promise to not just solvethe problem at hand, but to help the parties communicate more effectivelyin the future."

Before Redress was created, Postal Service employees embroiled in disputeswith their bosses followed procedures that could drag on for years.Generally, they would begin by filing an informal E.E.O.C. complaint. Theythen had the choice of dropping the matter or going down the bureaucraticpath of filing a formal grievance, starting an official investigation withall its affidavits and hearings. Ultimately, they might file a lawsuit.

The Redress program aimed to short-circuit that process by offeringdisgruntled workers mediation. If a person who filed an informal complaintagreed, a meeting would be set up, a mediator would hear both sides of thedispute and, in most instances, help propose a solution within a day.

Sometimes, all the worker wanted was for his boss to say he was sorry. "Thepower of an apology became very significant," Ms. Elcano said. "Peoplewould walk away from litigation with that because they felt it was anhonest give and take."

For example, one supervisor called all of his mail carriers by a number,Ms. Hallberlin said. One carrier thought it was demeaning and filed acomplaint. When confronted about it in mediation, the supervisor said hehad had no idea that some people found the practice offensive and said hewould stop it immediately. Case closed. "You're never going to get rid ofconflict," Ms. Hallberlin said, "you just want to handle it better."

Robert A. Baruch Bush, a law professor at Hofstra University who helpeddesign a training program for the 3,000 outside mediators in Redress, saidthe goal was to shift conversations between employees and their supervisorsfrom destructive to constructive. "If that happens," he said, "it becomes amore open corporation, and then the parties themselves in most cases willbe able to define what's bothering them and how to fix it." Resolution is abyproduct, he added.

Redress is intended to make mediation available at any stage of thegrievance process, not just at the beginning. In one class-actionracial-discrimination lawsuit that had originated in an E.E.O.C. complaint,black postal workers in Florida accused a white postmaster of making racistremarks about their work habits. They sought his dismissal, Ms. Hallberlinsaid.

It never came to that or to a dollar settlement, she said, because bothparties agreed to bring in an outside mediator. In the end, the postmasterapologized, wrote a check to the N.A.A.C.P. and joined the Postal Service'sdiversity committee. "In future dealings, he had a more harmonious postoffice," Ms. Hallberlin said.

Elaine Kirsch, an outside mediator working in New York, recalled a caseinvolving a postal supervisor and an employee, both women, one white andone black, neither willing to back down. The dispute was over theemployee's repeated lateness, Ms. Kirsch said, but really it was about alack of communication. After yelling at each other for one and a halfhours, she said, the two became quiet.

Ms. Kirsch said she took the opportunity to point out that the two had morein common than they had thought. Sometime after that, she said, thesupervisor and employee returned to hammering out particular issues andrehashing events. Finally, one said words to this effect: "You never lied.You always say what you mean." The ice was broken, Ms. Kirsch said, "andfrom then on it was easy as pie." It turned out that the employee was oftenlate because she had trouble finding care for her asthmatic child. Sheagreed to call her supervisor when this happened and her supervisor agreedto be more understanding.

To keep tabs on Redress's progress, the Postal Service hired Lisa Bingham,director of the Conflict Resolution Center at Indiana University."Quantifying has been one of the problems with the field of disputeresolution for some time," Ms. Bingham said. Her exit-survey researchshowed that postal employees and their union representatives andsupervisors were highly satisfied with the process and the mediators. And,to a lesser degree, the parties were satisfied with the outcome.

Mary P. Rowe, an adjunct professor at the Sloan School of Management atM.I.T., said Redress "was large, elaborate and better evaluated thanvirtually any other component or system like it." And, said Professor Rowe,a longtime ombudsperson at M.I.T., there was no reason that programs likeRedress should not thrive in the private sector. "Conflict managementprograms should function in every milieu," she said.

Not everyone is a big fan of mediation, of course, least of all theplaintiffs' bar. "Damages are often the best way to make up for how someonehas been harmed," said Pamela Coukos, a lawyer for Mehri, Malkin & Ross,the Washington firm handling the class-action lawsuit against Coca-Cola."Money can be a measure of how much respect you are given by a company." Atthe very least, Ms. Coukos said, workers with grievances should have achoice between litigation or some type of nonjudicial dispute resolution.

And in fact, such dispute resolution is widespread. Of the 606 companiessurveyed by Cornell, for example, 88 percent reported using mediation atleast once in the preceding three years and 79 percent reported usingarbitration, which like mediation employs outside neutral parties, butunlike mediation, reaches a binding solution.

Today, said David B. Lipsky, the Cornell professor who conducted the 1997survey with Ronald L. Seeber, companies are moving from a piecemealapproach to unified programs.

A little more than a year ago, for example, the Prudential InsuranceCompany of America in Newark, started its own program called Roads toResolution. Oliver B. Quinn, the program director, said Prudential took thestep to develop a system that offered mediation and arbitration in light ofthe litigation erupting elsewhere.

And as part of its settlement of a multimillion-dollar racialdiscrimination case, Texaco created an Ombuds Program in February 1998.Later that year, the company folded it and other programs like mediationand arbitration into a problem-resolution system. As a result, Carole A.Young, director of the Ombuds program, said a court-appointed task forcehad determined that litigation had been reduced by nearly half in the firstyear.

In the meantime, the good news continues for the Postal Service. KarenIntrater, one of the lawyers who came up with the idea of Redress, said theprogram had been so successful it was catching on among governmentagencies. "It's not a magic pill, but you can see the difference," Ms.Intrater said. "I've never seen anything that has such a potential forchange as this." (The New York Times, September 6, 2000)

RIO TINTO: Oceanic Islanders Use Federal Law to Sue British Mining Giant------------------------------------------------------------------------In an era where political leaders, corporations and consumers are debatingthe environmental costs of doing business globally, a new lawsuit by agroup of landowners is challenging the role and liability of corporationsin developing countries.

Using a Federal law that allows such civil actions, residents ofBougainville Island in Papua New Guinea (PNG) on September 6 filed aclass-action lawsuit in the United States against London-based Rio Tinto,one of the world's largest mining companies. The suit claims the companyengaged in a joint venture with the PNG government to maintain a coppermine on the island, which resulted in international environmentalviolations and crimes against humanity stemming from a military blockademotivated by civilian resistance to the mine.

The Rio Tinto lawsuit could have broad implications for other groupsseeking redress from crimes committed during wartime by private companiesacting in concert with local governments.

The lawsuit was filed in the United States District Court in San Francisco.The suit seeks to represent Bougainvilleans who continue to be exposed totoxins resulting from the Panguna mine, individuals who lost property dueto ongoing environmental contamination, and people injured or killed duringthe Bougainville conflict between 1989 and 1999.

Under the Alien Tort Claims Act, foreign nationals can bring suit in theUnited States against companies that violate international law. Rio Tintois the parent company of subsidiary U.S. Borax Inc., headquartered in LosAngeles. The plaintiffs are seeking damages for massive environmentaldestruction, human rights violation and for discrimination against theislanders.

Environmental Events Leading to the Lawsuit

At the core of the lawsuit is the Panguna copper mine and the politicalevents that erupted since the mine was established. Bougainville Island,located northeast of Australia, is part of the Independent State of PapuaNew Guinea. The people of Bougainville had lived on their rain-forestedland continuously for thousands of years.

Between 1969 and 1972, the Australian Colonial Administration leased landon the island to Bougainville Copper Limited (BCL), a mining subsidiary ofRio Tinto. The suit claims that landowners unsuccessfully resistedintrusion onto their land, and many Bougainvilleans were forced to relocateor flee the island. Three principal villages were relocated.

According to the suit, Rio Tinto then destroyed entire villages, razed therain forest, sluiced off a hillside and established the world's largestopen-cut mine, two kilometers across and half a kilometer deep. The mineexcavated 300,000 tons of ore and water every day during its operationbetween 1972 and 1988.

The suit alleges that Rio Tinto laid the groundwork for environmentaldisaster by improperly dumping waste rock and tailings and emittingchemical and air pollutants without regard for the villagers. The tailingsturned the fertile Jaba and Kawerong river valleys into wasteland,according to the suit. Fish and whole forests died and water becamenon-potable, turning 30 kilometers of the river system into a moonscape. Astailings made their way down the Jaba River to drain into Empress AugustaBay, the Bougainvilleans major food source of fish was also destroyed inthe bay.

According to the suit, Rio Tinto's mine operators also dumped chemicalsdirectly into the Kawerong River, leaving the river alkaline and coppergreen. The mine also emitted dust clouds that created upper respiratoryinfections and asthma in villagers.

The suit charges, that environmental damage destroyed the villagers' foodproduction and cash cropping systems. The Bougainville people began dyingmore frequently from upper respiratory infections, asthma and tuberculosis(TB). Coughs, colds and chronic ear infections became more common inchildren.

Political Events Leading Up to Lawsuit

When Panguna Mine originated in the late 1960s, Bougainville was anAustralian colony. Australia granted independence to Papua New Guinea in1975, insisting that Bougainville become part of the nation state.

In March 1988, the Bougainvilleans organized into the Panguna Land OwnersAssociation and petitioned Rio Tinto for greater control of the land aroundthe mine. By November 1988, when BCL ignored requests, individualBougainville militants engaged in acts of sabotage that forced the mine toclose. According to the suit, Rio Tinto stepped in and assisted PNG'smilitary actions that were designed to stop the rebels.

According to the suit, PNG coordinated with Rio Tinto to bring in troops toBougainville, allegedly providing helicopters for troop transport, to crushthe resistance. By April 1990, the PNG army imposed a military blockade ofBougainville.

"The men and women of Bougainville stood up for themselves and forced theopen-pit mine that was ravaging their environment to close, but they paid aterrible price at the hands of the PNG army which was encouraged by RioTinto," said Steve Berman, lead attorney for the plaintiffs. "The complaintalleges that Rio Tinto used their huge economic influence to effectivelyturn the PNG army into their private police force in the attempt to breakthe will and spirit of the Bougainvilleans, They didn't, and the villagerswant justice for the horrible pain and suffering they were forced toendure."

PNG's blockade of Bougainville cut off medical supplies to pressure thepeople to submit to PNG control and reopen the mine, the suit claims. Thesiege resulted in deaths from preventable diseases such as TB and whoopingcough, in more than 2,000 children in the first two years. Between 1990 and1997, approximately 10,000 Bougainvilleans died as a result of the siege,the suit claims.

"We intend to prove that Rio Tinto treated Bougainvilleans with no respectand thought of them as inferior in every way: socially, economically,racially and politically. This lack of basic human compassion is one of themany reasons that Bougainvilleans are demanding justice," said SteveBerman.

The suit also claims that approximately 15,000 civilians died as a resultof armed acts by PNG troops. PNG military actions included aerial bombings,burning of houses and villages, wanton killing and acts of cruelty, rapeand degrading treatment, alleges the suit.

"By exerting financial pressure, Rio Tinto played an active role in thedemise of the Bougainville's environment and people, as surely as if they'dpulled the trigger themselves," said Paul Luvera, co-counsel for theplaintiffs. "This case seeks justice for those who are still struggling torecover a life for themselves on their own land."

Headquartered in London, Rio Tinto operates more than 60 mines andprocessing plans in 40 countries. Claiming consolidated assets of US$12.8billion in 1999, the company employs more than 34,000 workers worldwide.

Steve Berman is managing partner of Hagens Berman in Seattle. Recentlycited as one of the nation's top litigation attorneys by The National LawJournal, Berman is a nationally recognized expert in class actionlitigation. Berman represented 13 states in lawsuits against the tobaccoindustry. He was the prime architect of the groundbreaking Liggett Tobaccosettlement, which resulted in the release of thousands of previouslyprivileged tobacco industry documents. Berman also served as lead orco-lead counsel in several other high-profile cases including theWashington Public Power Supply litigation, which resulted in a settlementexceeding $850 million. Other cases include litigation involving the ExxonValdez oil spill; Louisiana Pacific Siding; The Boeing Company; MorrisonKnudsen; Piper Jaffray; Nordstrom; Boston Chicken; and Noah's Bagels.

Paul N. Luvera, partner at Luvera, Barnett, Brindley, Beninger andCunningham in Seattle, is a leading trial lawyer in the United States.Luvera served as co-trial counsel in the State of Washington's trialagainst the tobacco industry. Luvera is a member of the InternationalAcademy of Trial Lawyers.

Peter Gordon, managing partner of Slater & Gordon in Australia, is alsoworking on the case. Gordon is one of Australia's leading litigationlawyers. Gordon has conducted major class actions both within Australia andoversees on behalf of Australian consumers.

TOBACCO LITIGATION: Hillsborough Trial against R.J. Reynolds Begins-------------------------------------------------------------------Trial is under way against cigarette maker R.J. Reynolds Tobacco Co.,accused in the lung cancer death of a woman who smoked for more than 40years.

Suzanne Jones, who started smoking in her teens, died in 1995 at age 62.Her husband, Bob Jones, filed a lawsuit two years later against fourtobacco companies, contending his wife's habit of smoking a pack a daykilled her.

The suit claims the companies negligently designed cigarettes, failed towarn consumers about the health risks related to smoking and conspired todefraud smokers. However, all but one of the four defendants remained astrial began Tuesday in a Hillsborough County courtroom. Jones earlierdismissed Brown & Williamson Tobacco Corp., American Tobacco and PhilipMorris Inc. from the suit.

Howard M. Acosta, Bob Jones' attorney, said in opening statements thatSuzanne Jones was addicted to cigarettes, even continuing to smoke afterbeing diagnosed with lung cancer. "Perhaps Suzanne Jones should have triedharder to quit, but once you're addicted the choice changes," he said."It's no longer completely voluntary. You have an unconscious craving fornicotine once you're addicted."

Acosta, a St. Petersburg lawyer, asked jurors to hold R.J. Reynoldsaccountable for hiding evidence of the link between smoking and lungcancer.

But attorneys for the Winston-Salem, N.C.-based cigarette maker argued thatit was colon cancer rather than lung cancer that killed Jones. Paul G.Crist, a Cleveland attorney, told jurors that a tumor in Jones' abdomen wasthe size of a softball but the one in her lung was only the size of amarble.

Crist told the jury that Jones knew about the health risks associated withsmoking but continued to do so anyway. "As she told her friends, 'You doyour thing and I'll do mine,"' he said. Jones is seeking unspecifiedcompensatory and punitive damages.

The trial comes on the heels of a record-setting $145 billion verdict forsick Florida smokers. The case against the nation's five biggest cigarettemakers, including Reynolds, was the first smokers' class-action lawsuit togo to trial. Big Tobacco is appealing the July 14 award. (The AssociatedPress State & Local Wire, September 6, 2000)

This material is copyrighted and any commercial use, resale orpublication in any form (including e-mail forwarding, electronicre-mailing and photocopying) is strictly prohibited without priorwritten permission of the publishers.

Information contained herein is obtained from sources believed to bereliable, but is not guaranteed.

The CAR subscription rate is $575 for six months delivered via e-mail.Additional e-mail subscriptions for members of the same firm for theterm of the initial subscription or balance thereof are $25 each. Forsubscription information, contact Christopher Beard at 301/951-6400.